Last week provided a number of economic updates, and a report from Fed Chair Janet Yellen helped push the markets higher. Rather than providing a rundown of every report, we want to focus on two in particular that give key information on economic health—and a reminder to look beyond the headlines.

Beyond the Headlines in Housing and Manufacturing

The deeper story: Relatively few existing houses are available for purchase. In addition, builders are focusing on more lavish new homes rather than the modest ones that many buyers seek. As a result, the median price of a new home hit its highest July level ever, climbing to $313,700—6% higher than this time last year. Existing home prices are also 6.2% above where they were in July 2016.

The deeper story: The headline’s stated monthly decline is largely due to a sharp drop-off in orders for transportation equipment, in particular for civilian aircraft. However, if you dig deeper, you will see that July’s civilian aircraft decrease follows a massive 129.3% increase in June, calming any concerns about the aircraft industry. Overall, orders for core goods beat expectations and could help drive a higher reading for second quarter GDP.

The takeaway: Orders and shipments for many key goods increased in July, which points to positive sentiment among businesses—and good news for the economy.

On the Horizon

This week, we will receive the second reading of second-quarter GDP, as well as both Consumer Confidence and Consumer Sentiment updates. Furthermore, according to President Trump’s Chief Economic Advisor, an announcement on tax reforms will occur on August 30. Together, these reports could affect market behavior and indicate both where the economy has been and what may be on the horizon.

As always, while we pay attention to today’s headlines and updates, our focus remains solidly on how to move you toward the future you desire. Should you have any questions, we are here to help.

Why didn’t the markets react to the geopolitical turmoil by turning sharply negative? As we’ve shared before: Headlines shouldn’t drive long-term market behavior—economic fundamentals should. Last week, we received reports indicating the economy continues to be strong in a number of areas.

Strong Business Inventories: Factory, warehouse, and retail business inventories all jumped for a combined 0.5% increase in June. The data looks promising—inventory levels tend to rise in positive economic environments.

Uneven Industrial Activity: Industrial production rose 0.2% in July. This growth was lower than expected due to declining motor vehicle production dragging on the index.

Mixed Housing Data: The housing market index surged by 4 points as home-builders experience an increasing demand from buyers. But despite the growing appetite for new construction, July’s housing starts slipped, in part because builders are struggling to find experienced labor and new sites to build on.

Looking Ahead

This week, we will receive more data that helps deepen our perspectives on housing market health, Q3 expectations, and the Fed’s upcoming plans.

In this time of dramatic headlines and geopolitical uncertainty, we want to remind you that you are in control of your wealth and financial future. No matter what the talking heads want you to believe, stay focused on market fundamentals. Please call or email if you have any questions concerning specific market data or larger, developing issues.

No one wants to see a clash between two nations with nuclear capabilities. So, when the war-of-words between North Korea and the U.S. reached a new level earlier this month, markets briefly stumbled as investors grew uneasy. While we don’t normally opine on geopolitical events, we wanted to help ease any financial worries you may have related to this recent conflict.

When sharing this analysis, we certainly do not have a crystal ball—and we recognize that any military escalation could affect far more than your investments. But, as we all look to see what’s on the horizon, we believe that historic perspective may help ease concerns about the tension’s impact on your financial future.

What can we learn from the past?

Data from Strategas Research Partners shows us that while the markets often have negative reactions to events when they first occur—they can recover within days or months.

For instance, on the day of Pearl Harbor, the S&P 500 declined 3.8%, but it was back within positive territory 20 days later. And just last year, the S&P 500 dropped 3.6% when the BREXIT vote came through — then was up by 19.5% a few months later.

History also shows us that war often does little to bring down the financial markets. In the month that two atomic bombs fell on Japan, the S&P 500 gained 5.8%.

Of course, no one wants to imagine the tension with North Korea escalating into war. Thankfully, Pyongyang announced on August 15 that they would not, in fact, strike near Guam. And with U.S. Secretary of State Rex Tillerson’s assertion that there is no “imminent threat” of nuclear attack, the risk of war seems to be retreating.

What should you do now?

Looking forward, we must remember that the markets don’t always bounce back quickly after geopolitical events — but making fear-based choices can be very costly in the long run. No matter what happens, we are here to help you stay abreast of current market dynamics and focus on the economic fundamentals that drive lasting value.

We will continue to monitor the situation in North Korea, but headlines won’t distract us from pursuing our true goal: moving you toward the future you desire. If you want to discuss your specific strategy or investments in greater detail, please contact us any time.

And if you’d like to gain a wider understanding of how the markets have responded to geopolitical events in the past, explore the chart from CNBC and Strategas Research Partners included below at the end of this message.

We appreciate the thoughts of David Rosenberg, chief economist and strategist at Gluskin Sheff who said, “Geopolitics can create anxiety in financial markets, but aren’t going to bring the $18.5 trillion beast, otherwise known as the U.S. economy, to its knees.”

Last week, rising tension between North Korea and the U.S. rattled the world’s markets. As the two countries traded tough words, concerns escalated and markets reacted emotionally to the news. Though stress is building internationally, we remain committed to focusing on the market fundamentals that drive long-term value.

We recently published a special update outlining the details of how markets have reacted to other significant geopolitical events. History shows that markets can fall in the wake of alarming news but do recover, given time. We encourage you read through the post and talk to us if you have questions or concerns. You can find the special update HERE.

Though international developments dominated headlines, economic news important to markets and investors continued to roll out. The data reflects a solid economy, but some possible headwinds are on the horizon. Here are the highlights:

Impressive Corporate Earnings: Q2 corporate earnings reports both domestically and internationally were impressive. Reported corporate earnings in the U.S. increased an average of over 10% for the second quarter in a row—their first time doing so since 2011.

Low Inflation: The consumer price index, which measures changes to the average price of specific goods and services, rose only 0.1% in July. Expectations for a 0.2% increase failed to materialize as housing and travel costs, wireless services, and auto sales all slumped in July. At 1.7%, year-over-year inflation remains below the Federal Reserve’s targeted 2% growth rate. Continued low inflation may cause the Fed to rethink its plans to raise interest rates.

High U.S. Household Debt: The current outstanding consumer debt of $12.7 trillion is now higher than the previous record reached in 2008. This debt load could wind up being a drag on consumer spending and the economy as a whole.

What Is Ahead

Tense geopolitical headlines may continue, but there will be plenty of market news, too. Retail, manufacturing, and housing data will come out this week, and Friday’s August consumer sentiment numbers will be of interest. Though the markets may move with emotions, economic fundamentals should continue to be the base for long-term value.

No matter what questions you may have, we always welcome you to reach out and contact us. We are here to help.

A slow first quarter followed by stronger growth in the spring has been a familiar pattern over the past several years. Because of it, the government began combined efforts to manage shortcomings in the government’s seasonal adjustment process. Even with this spring rally, though, economic analysts do not think it will meet the ambitious targets set by President Trump. For 2017, economic experts believe growth will come in around 2.2%, which is where growth has been since the Great Recession recovery began in mid-2009.

In this video, Josh will battle the mosquito apocalypse, and discuss some of the economic headlines that influenced markets in July, and give you some insight into what they could mean for you as an investor.

If you have any questions or concerns about your portfolio after watching this video, please don’t hesitate to reach out to us by email, or by giving us a call at (419) 425-2400. We would be happy to talk.